San Francisco leaders propose halving transfer tax on large deals to unlock stalled housing developments

What is being proposed

San Francisco’s mayor and members of the Board of Supervisors are moving to reduce the city’s real property transfer tax on high-value transactions, framing the change as a tool to restart housing projects that have received approvals but have not moved forward.

The legislative package, referred to as the BUILD Act, would lower the transfer tax to pre-2020 levels for the largest deals. For transactions at or above $10 million, the rate would be reduced from 5.75% to 2.75%. For deals at or above $25 million, the rate would be reduced from 6% to 3%. The proposal would not change transfer tax rates for single-family home sales or transfers below $10 million.

How the city can change the tax without a new citywide vote

The planned ordinance is designed to roll back rate increases enacted by voters in November 2020, when the city doubled transfer tax rates on property sales valued at $10 million or more. Under the structure adopted in 2020, the rate for $10 million to $25 million transfers rose from 2.75% to 5.5%, and the rate for $25 million and above rose from 3% to 6%.

City officials backing the new plan are relying on a later voter-approved change (2024) that allows the city to decrease transfer tax rates through legislation, while increases would still require voter approval.

The stated housing rationale

Supporters argue that the transfer tax can be a significant cost at the “exit” of a project, affecting how developers and investors calculate whether a proposed building can pencil out—especially for multifamily developments that are typically sold after construction and lease-up. The mayor’s office has estimated that cutting the transfer tax in half could reduce costs by about $32,000 per housing unit in cases where a newly built multifamily project is sold after stabilization.

Backers also point to the scale of the city’s entitled-but-stalled pipeline. Labor leaders have cited roughly 34,000 housing units tied to major, multi-phase projects as being at risk of delay absent changes that improve financing conditions. One project highlighted in public discussions is a planned high-rise at 1111 Sutter St., a mixed-income development expected to deliver 303 units.

How officials propose offsetting revenue losses

Because the transfer tax is a meaningful—yet volatile—city revenue source, the proposal includes an accompanying ballot measure intended to recoup some funding by eliminating an existing tax exemption used in certain foreclosure-related transfers, including “deed in lieu” foreclosures. City officials have argued that use of the exemption has expanded in recent years in connection with high-value commercial property transfers.

The package pairs a rate reduction for large transactions with a proposal to narrow exemptions on foreclosure-related transfers, aiming to shift where transfer-tax liability falls rather than simply reducing it.

Support and criticism taking shape

• Supporters include major building trades and business organizations, which characterize the proposal as a way to reduce friction in the capital stack and encourage deals that can lead to construction jobs and new housing production.

• Critics argue that lowering the tax on the largest transactions primarily benefits wealthy sellers and investors, and may undermine funding capacity at a time when the city is under pressure to finance affordable housing and core services.

What happens next

The legislation will require approval through the city’s lawmaking process, while the proposed change to foreclosure-related exemptions would go to voters. City leaders have also indicated they are working on additional options for affordable-housing funding, including the possibility of a bond measure, with further details expected within months.